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Bernanke sworn in as 14th Fed chairman
(AP)
Updated: 2006-02-02 08:48
Some analysts, however, are worried that the Fed may have to go further than
one more rate hike if inflation pressures get out of control.
Stephen Stanley, chief economist at RBS Greenwich Capital, said he believed
the Fed would not only raise rates in May but perhaps as many as three more
times after that
鈥淲e look for strong economic figures and a gradual pickup in core inflation
to force several more moves this year,鈥� he said.
This 15 November
2005 file photo shows Ben Bernanke in Washington,
DC.[AFP] |
However, analysts in the one-more-and-done camp argue that the economy is
already slowing as rising interest rates begin to cool the red-hot housing
market. If the Fed overdoes the tightening, it could cause a more severe slump
in housing.
鈥淭hat could really crimp consumer spending and hold back economic growth,鈥�
said Greg McBride, senior financial analyst at Bankrate.com, an online financial
service.
One hint, these analysts say, that the Fed is close to ending its rate hikes
was a small change in the wording of Tuesday鈥檚 statement. The Fed said future
rate increases 鈥渕ay be needed鈥� to fight inflation, when in December the Fed said
such rate hikes were 鈥渓ikely to be needed.鈥�
More about the Fed鈥檚 intentions will be known on Feb. 15 when Bernanke is
scheduled to give the Fed鈥檚 twice-a-year monetary report to Congress. Analysts
look for him to signal a strong bond with Greenspan, especially in the area of
fighting inflation.
In saying good-by on Tuesday to hundreds of Fed staffers at a reception,
Greenspan told them they had an important job to do in protecting the dollar
against the ravages of rising prices.
鈥淲e are in charge of the nation鈥檚 currency,鈥� Greenspan said. 鈥淭he central
bank, because of that, is involved in everyone鈥檚 daily lives. We are the
guardians of their purchasing power.鈥�
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